07 February 2005

Economic Rumbles as Whisky Imports Fall

So it seems whisky and brandy imports fell in 2004, down 15 and 36 percent respectively. Now, that may not seem like a big deal, but this is part of an overall 8 percent drop in alcohol imports, the first drop since 1998.

Anecdotally (as I haven’t gotten around to find the numbers again), Koreans were importing massive amounts of foreign whisky and brandy in 1995 and 1996 – and if I remember correctly, Korea even ranked as the number one destination for at least one type of high-quality (and price) French alcohol.

In the 1990s, prior to the Asian economic crisis, Koreans were profligate spenders – they bought anything luxury (alcohol, golf clubs, cars with like 100 percent added import taxes) and made it a point to live up to the conspicuous consumer appearance of a booming economy.

Of course, the economy was not all it appeared to the outside, and was caught up n the collapse like many of its neighbors. And down went alcohol imports. Koreans turned again to their domestic brews like soju and imported cheap foreign beer and wine. But of course, the sense of embattled economy dissipated, an Koreans again started spending – as seen in a tiny part by the rise in expensive alcohol imports.

The precipitous dip in 2004, then, appears to reflect a natural move by Koreans to react to economic problems. There are an estimated 1.3 million working poor, some 76,000 jobs were lost form Dec. 2003 to Nov. 2004, and inflation stood at 3.6 percent in 2004.

But things may be changing as Koreans look at home for ways to save – and accelerate the economy. The consumer expectations index rose in January, domestic car sales began rising again in December, as did credit card use and service industry output.

Korea has always shown a particular skill in recovering from various troubles and crises, and the shift to domestic sales and purchases seems to be a natural move by the society to once again adjust. Whether it will insulate the country from the rumblings in China – which threatens to shake the rest of the region – remains to be seen.